News Release
July 26, 2000

Six Leading Power and Natural Gas Trading Companies Join Intercontinental Exchange

NEW YORK (July 26, 2000) – Six of North America's leading power and natural gas trading companies have entered into an agreement in principle to purchase an equity position in IntercontinentalExchange, creating the world's largest on-line, over-the-counter (OTC) market for energy and metals. It was also announced today that trading in precious metals will commence in August.

The six new IntercontinentalExchange partners are American Electric Power, Aquila Energy (a unit of UtiliCorp United), Duke Energy, El Paso Energy, Reliant Energy, and Southern Company Energy Marketing (a unit of Southern Company). In April, these six companies formed a corporation, the Energy Trading Platform Holding Company, Inc. (ETPHCo) to create an independent power and natural gas trading exchange. Together, these companies, in 1999, accounted for trading in some 1 billion megawatt-hours of electricity and 42 billion cubic feet of natural gas per day in North America.

IntercontinentalExchange was founded in March as an Internet-based trading platform for OTC precious metals and oil. Initial partners include BP, Deutsche Bank AG, Goldman Sachs, Morgan Stanley Dean Witter, Royal Dutch/Shell Group, SG Investment Banking, Totalfina Elf, and Continental Power Exchange -- which is providing the trading technology and management team.

"The participation in IntercontinentalExchange will result in the creation of the largest independent online market for natural gas and power in North America. It will lead to greater market liquidity and price transparency - key drivers to a successful online trading business," said Janine McArdle, President of ETPHCo. "The equity participants in this exchange are leaders in their respective industries. We are committed to building an independent exchange that encourages a rapid migration to online trading by providing equal access to all participants to trade across our platform." In addition to holding an equity position in the Exchange, each of the partners has committed to a significant level of annual participation to provide liquidity.

"The expanded IntercontinentalExchange will enable users of our system to trade virtually the entire OTC energy complex—oil, power, and natural gas—across a single platform and on a global basis," states Jeffrey Sprecher, CEO of IntercontinentalExchange. "With the quality, breadth and sheer volumes that our partners bring to the market, we will be able to offer traders real-time access to liquidity and capture a significant portion of the vast market for OTC commodities brokerage," he concluded.

It was also announced today that the first of the Exchange’s markets, precious metals spot, forwards, and options, will begin trading in August. Energy trading in oil, power, and natural gas products will commence in the fall. There will be no "memberships" in IntercontinentalExchange and no dues or fees beyond those incurred in the process of trading. Participation will be open to all commercial market participants.

As with precious metals and oil products, the overwhelming majority of trading in the OTC power and natural gas markets is conducted via telephone. Of the approximately 2.7 billion-megawatt hours and 154 billion cubic feet of natural gas traded in 1999, Forrester Research reports that only 0.2 percent of electricity trades and 2 percent of natural gas trades were conducted online. Forrester predicts these figures will increase up to 25 percent and 11 percent, respectively, by 2004.

The capabilities provided by IntercontinentalExchange’s advanced trading platform will offer OTC participants increased market transparency, liquidity and efficiency while preserving the anonymity market participants desire. The Exchange also plans to develop facilities in the future that would permit market participants to clear and settle OTC products.

The technological backbone for IntercontinentalExchange is The ICE, a robust and scalable trading system. The system provides participants with secure access and global trading support around the clock and throughout the business week.

Based in Atlanta, IntercontinentalExchange offers innovative features such as:

IntercontinentalExchange recently opened offices in London and New York.

Additional info for editors:

NEW PARTNERS

American Electric Power (NYSE: AEP) is a multinational energy company based in Columbus, Ohio. AEP is one of the United States largest generators of electricity with more than 38,000 megawatts of generating capacity. AEP is also one of the nation’s leading wholesale energy marketers and traders. AEP delivers electricity to more than 4.8 million customers in 11 states – Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The company serves more than 4 million customers outside the U.S. through holdings in Australia, Brazil, China, Mexico and the United Kingdom. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.

Aquila Energy is one of the largest and fastest growing energy marketing and risk management organizations in North America. With its focus on natural gas, power, and a variety of risk management and custom energy products, the company ranked in 1999 as the second largest wholesaler of electric power and third largest wholesaler of natural gas in the United States. As a wholly owned subsidiary of UtiliCorp United, Aquila is headquartered in Kansas City, Missouri, but also has additional sales and marketing operations in Houston, Denver, Calgary and other targeted locations in North America, as well as in the United Kingdom, Germany, Norway and Spain. Aquila revenues in 1999 were $16.7 billion.

Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses - generating revenues of nearly $22 billion in 1999. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

El Paso Energy Corporation (NYSE: EPG) provides comprehensive energy and financial solutions through its strategic business units: El Paso Merchant Energy Company, Tennessee Gas Pipeline Company, El Paso Natural Gas Company, Southern Natural Gas Company, El Paso Energy International Company, El Paso Field Services Company, and El Paso Production Company. The company owns North America’s largest natural gas pipeline system, in terms of both throughput and miles of pipeline, and has operations in natural gas transmission, merchant energy services, power generation, international project development, gas gathering and processing, and gas and oil production. The company is headquartered in Houston, Texas and has over $19 billion in assets.

Reliant Energy (NYSE: REI), based in Houston, Texas, is an international energy services and energy delivery company with $15.3 billion in annual revenue and assets totaling $28 billion. The company has a wholesale energy trading and marketing business that ranks among the top five in the U.S. in combined electricity and natural gas volumes and has a presence in most of the major power regions of the U.S. Reliant Energy also has power generation and wholesale trading and marketing operations in Western Europe. The company has more than 26,000 megawatts of power generation in operation in the U.S. and Western Europe.

Southern Company Energy Marketing is jointly owned by Southern Energy Inc. and Vastar Resources Inc. Southern Company Energy Marketing provides energy marketing, risk management and financial services and other energy-related commodities, products and services to customers in North America. Southern Energy’s parent company, Southern Company (NYSE: SO), is the largest producer of electricity in the United States.

INITIAL PARTNERS

BP (NYSE: BPA) is one of the world's largest companies and a leader in energy and petrochemicals, with 1999 revenues of over $101 billion. The company's main activities are exploration and production of crude oil and natural gas; refining marketing, gas marketing, supply and transportation; manufacturing and marketing of petrochemicals; and growing activity in solar power generation. BP has well-established operations in Europe, North and South America, Australasia and parts of Africa.

 

 

With over $953 billion in assets as of March 31, 2000, and approximately 90,000 employees, Deutsche Bank offers its clients unparalleled financial services throughout the world. It ranks among the leaders in asset management, capital markets, corporate finance, custody, cash management and private banking. Deutsche Bank is divided into five major business units: Global Corporates and Institutions, Global Technology and Services, Asset Management, Corporates and Real Estates and Private and Retail Banking.

Goldman Sachs (NYSE: GS) is a leading global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The Firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

Morgan Stanley Dean Witter & Co. (NYSE: MWD) is a preeminent global financial services company and a market leader in securities, asset management, and credit services. The company’s top-ranked research along with world class product origination, asset management and other extensive resources create a unique combination of capabilities that provide both individual and institutional clients with access to the most comprehensive array of high quality products and services in the financial services industry today. The Company has offices in New York, London, Tokyo, Hong Kong and other principal financial centers around the world, and has 506 branch offices serving individual investors throughout the United States.

The Royal Dutch/Shell Group of Companies - usually known as Shell - has grown out of an alliance made in 1907 between Royal Dutch Petroleum Company in the Netherlands and the "Shell" Transport and Trading Company in the UK. Today the Group has five core businesses: Exploration & Production, Oil Products, Chemicals, Gas & Power Generation, and Renewables.

SG Investment Banking is the commercial and investment banking arm of the Société Générale Group. Present in over 60 countries and with expertise in capital markets, advisory and origination services, structured finance and commercial banking. SG Investment Banking builds innovative, integrated financial solutions for its corporate, institutional and public sector clients. More information about the company is available on the Internet at: www.sg-ib.com

The Totalfina Elf Group is now one of the largest private sector oil and gas companies in the world, with a world-class business in chemicals.

Continental Power Exchange

Continental Power Exchange was started in 1994 by a US electric utility company to create a spot market exchange for electric power, primarily in the MidWest US. In 1997, the company was purchased by a private investor and, under the leadership of a new management team, dramatically expanded its scope of interest by initiating the in-house development of an electronic trading system for the real-time purchase and sale of a large array of commodities and derivative products. The company completed the initial work on its proprietary software in early-2000 and approached a number of major commodities trading firms to provide initial liquidity – out of which was born InterContinental Exchange.

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